Is It Legal To Inflate 'Original' Prices During A Sale?

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The Black Friday / Cyber Monday weekend is one of the busiest sales periods of the year. Unfortunately, unscrupulous merchants have been known to jack up their "previously sold for" pricing to make it look like you're getting a better deal. Is this legal?

Under Australian Consumer Law, artificially inflating the 'Before' price during a sales promotion is illegal and falls under false advertising. Here's what the ACCC says on its website:

It is illegal for a business to make claims to customers about its goods or services — including claims about price — that are incorrect or likely to create a false impression.

Businesses must ensure that consumers are not misled about the savings that may be achieved. Statements such as 'Was $150/Now $100' or '$150 Now $100' are likely to be misleading if products have not been sold at the specified 'before' or 'strike through' prices in a reasonable period immediately before the sale commences.

In addition to the above, merchants are supposed to only display recommended retail prices (RRPs) that reflect the current market price of the item. For example, the price of a two-year old smartphone model should not be compared to the original RRP from the time of release. (Unless the market price hasn't depreciated. )

With that said, retailers are given a fair amount of wriggle room when it comes to displaying two-price advertising. As long as they can prove through business records that the products were recently sold at the before price, the advertisement is considered fair game. (This is why you sometimes see top-whack pricing in the leadup to a big sale.)

Unfortunately, taking retailers to task over this dubious practice is a difficult undertaking - especially for overseas merchants who don't have storefronts in Australia. Our advice is to do plenty of comparative research on prices before snapping up an online "bargain" - sometimes the savings aren't all they're cracked up to be.

Did you just catch yourself wondering if something was legal or not? Let us know and we may be able to answer it in our next Is It Legal? feature.


Comments

    Like shavershop? Half their store is on sale from the pre release placeholder RRP to the current RRP. Often other stores have cheaper RRP than shavershops sale, but suckers are drawn in by the huge discounts.

    I recall I selected a rocky road ice cream in a cone for the displayed price of $3.50 only to be told that it cost $4.00, I was told the shown price was ‘a mistake’.
    Since the seller was a kid apparently minding the store, I didn’t press the matter.
    I might have been manipulated but the ice cream was yummy.

    You mean like when Woolies puts a red lowest price tag, that is exactly the same as the regular price, over the regular price sticker to trick you into thinking you're getting the lowest price?

      Even better when they advertise a 1c discount! Think they did it with roast chickens, "now $9.99" is in huge letters then tiny letters underneath it said "was $10 save $0.01" haha!

      Woolies are great because they don't update their stickers very often, I've had a lot of products for free because they haven't removed a special sticker so they have to just give it to you!

        They technically don't have to give it to you for that price, though the grocery trade operates under a code of conduct which says they should. Most abide by this. In an ordinary store (such as the ice cream example above) it is reasonable to tell you the pricing label was a mistake BEFORE THE TRANSACTION. At this point it is only an offer of contract. the proviso is, they must be seen to not be doing this on a misleading basis. If you go to buy the product for $1, only to be told it was a mistake and the price is actually $2, fair enough. If, however, they make no attempt to correct the pricing on remaining stocks and still offer them for sale, that is easily construed as misleading.

    I hate it how stores like EB Games can get away with charging 20% more than everyone else does then have "sales" that just reduce the price down to what everyone else sells the item for regularly.

      Yeah, it is pretty dodgy, but then again since they will often price-match on request this isn't a huge issue. Just do a little homework before you walk into the store. ¯\_(ツ)_/¯
      The only ones who pay full price at EB are those who allow themselves to be suckered.

    Some businesses (I'm thinking of Kathmandu types) are experts at what I consider to be a "switch and bait" routine. Almost everything in some stores is at dramatically reduced pricing. They actually offer it for sale at the higher price, often switching back on occasion to maintain the "story" of full retail, yet the truth is they almost never sell goods at the full price because they are totally noncompetitive.

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